The importance of financial literacy
That old saying, “a fool and his money are soon parted”, has never been more apt. But today, even the wise must be wary.
The world of finance is changing rapidly. Although there are more investment options for consumers, more sophisticated products, and no shortage of advice or advisers, the risks and responsibilities for each individual are far greater.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 19 Jan 15
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That old saying, “a fool and his money are soon parted”, has never been more apt. But today, even the wise must be wary.
The world of finance is changing rapidly. Although there are more investment options for consumers, more sophisticated products, and no shortage of advice or advisers, the risks and responsibilities for each individual are far greater.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
The world of finance is changing rapidly. Although there are more investment options for consumers, more sophisticated products, and no shortage of advice or advisers, the risks and responsibilities for each individual are far greater.
In years past, buying a house was the prime financial responsibility. The stock market was for the relatively wealthy few. The old age pension supported most people in retirement.
Now we have to be responsible for saving for our own retirement so we need to understand the best investments and products to achieve our goals, especially as we are living longer. Plastic has largely replaced cash and cheques, bringing with it its own set of problems. Even housing finance is more complicated.
In a nutshell, we have to become more responsible for our own financial security and not rely on the government or our employer.
At the same time there are greater investment risks as highlighted by the Global Financial Crisis.
What does this all mean? Quite simply, the need for people to be financially literate has never been more important. They need to understand where to find the right financial information and how to interpret it.
Today, most information is on the Internet. But much of it comes from product providers trying to promote their wares. This industry is filled with smart people who understand the issues and how to exploit them.
So financial literacy needs to be about more than just educating consumers about the difference between balance and high growth funds or the effect of fees on their investments.
It requires that consumers be able to read between the lines of what they are being told to determine the true value – and risks – of any investment.
This is a difficult task as experience in the world of investments is just as important as being financially literate.
But being financially literate is an excellent starting point. It at least helps you ask the right questions in an increasingly complex financial world.